Pensioners applaud pension fund reforms

Botswana Civil Service Pensioners Association ( BCSPA) has applauded government for strengthening and widening oversight authority of the Non- Bank Financial Institution Regulatory Authority ( NBFIRA) on pension funds. “NBFIRA should have teeth, to be effective and for it to be taken seriously. The allegations on the misuse of pension funds has eroded our confidence in the administration of pension funds. “Therefore, we support improving corporate governance of funds,” said BCSPA Executive Secretary, Mukani Pelaelo. The comments come as dialogue is ongoing on the Retirement Funds Bill 2022, recently read for the second time by the Minister of Finance. The pensioners have further commended amendments of the Retirement Funds Act, proposing to allow pension fund members to withdraw a portion benefits in the event of an emergency. “Even though these enhanced encashments in the Bill are for deferred members only at this point in time, we are optimistic that The Ministry of Finance will continue to do necessary studies to address familiar issues faced in light of active members,” said Pelaelo. “Deferred members being able to use residual funds to pay for medical bills when they have become terminally ill, The Bill will have essentially played its role as it would have given the member a chance of the future by significantly promoting life instead of death as the member would stand a chance to continue living for the next foreseeable future,” said Pelaelo. She said inherently, pension is saving for the future, citing that if one cannot be assisted from the savings, then there was no reason to save. Currently, the Ministry of Finance, through NBFIRA, is conducting a study to review the effect and impact of allowing encashment concessions for active members and pensioners on the pension system in Botswana. The results of the study are expected in November and the adopted changes from the study will then be processed as subsequent amendments as soon as the study is completed. BCSPA wants active members to be allowed to encash their funds when they have become terminally ill and have to pay for medical expenses. Meanwhile, BCSPA has also celebrated the changes in the Income Tax ( Superannuation Funds) Regulations, 2001. “Increasing the amount of pension commutable at retirement from the current one third to a maximum of 50 percent. This will essentially be very helpful to active members who are on loans or mortgage that would like to pay off their dues. “They will be able to use more of their funds to settle their obligations sooner than to rely on their monthly retirement annuity as it will be less than what they were earning under employment,” said Pelaelo.